Is the corporate tax burden too high in your home country? It is a well-known fact that most industrialized countries have higher corporate income taxes, when compared to the rest of the world. In this article, by TaxClimate.com, we discuss countries that have zero corporate income tax…
Why Zero Corporate Income Tax Is So Appealing
Operating a company in a developed country has its advantages, including:
- Developed infrastructure
- Political stability
- Strong regulatory environment
- Access to liquid capital markets
… just to name a few.
These advantages come at a price, however, and this usually means a higher corporate income tax rate. In the United States for example, the highest marginal corporate tax rate is 39.1%. In developed countries, such as the G7, the corporate income tax rate is 33.96% (Weighted Average in 2015). This is the highest average for corporate tax rates in the world.
If you feel that the corporate income tax burden is too high in your home country, then you might want to consider transferring your corporate structure to a more tax friendly region.
Here’s a list of countries where the corporate tax rate is zero.
The Bahamas is a country in the Caribbean consisting of 700 islands, and is a short flight away from the United States. It has an established banking system and, of course, zero corporate income tax. To obtain residency in the Bahamas, you will need to make a minimum investment of $500,000 in real estate. A fast-tracked option would involve making a real-estate investment of $1,500,000 or more.
Bahrain is another country free of corporate income tax. In addition to this, there is no personal income tax, VAT and withholding tax. It’s important to note, however, that there is a 1% Social Insurance Tax on personal salaries. This is used to fund unemployment benefits. There is also a municipal tax on rented properties.
Bermuda is another country with zero corporate income tax. Additionally, there is no VAT on goods and services, no capital gains tax and no direct income tax. Other advantages of this country include its location, simple incorporation process, a well-established legal system, professional workforce, and political stability.
Isle of Man
The Isle of Man is located in the Irish sea, between England and Ireland. It has gained the reputation of a low tax financial hub, since it does not levy corporate income tax, inheritance tax, or stamp duty.
The Cayman Islands
The Cayman Islands is one of the most well-known countries for being a tax haven. Apart from the fact that it has zero corporate tax, it actually has no form of taxation at all. This makes reporting requirements in the Cayman Islands simple, since no formal accounts need to be filed. Only a simple annual declaration is required to confirm your company operates outside the Cayman Islands.
As you can see, there are a number of countries located around the world with zero corporate tax requirements. If you’re thinking about relocating your corporate structure to a more tax friendly region, it’s important to research all your options carefully before pulling the trigger since the process can be tedious and the decision you make will have a long-standing impact on your business as a whole.